Election 2024! What a year!

The unending political ads, the lawn signs, the text messages, and the sad and divisive rhetoric … Honestly, I’m so glad it’s all over. 

Now that we know who won and the dust is settling, I’ve been seeing a lot of financial news stories about what to invest in and what not to invest based on Donald Trump's return to the presidency.

There are lots of news stories talking about the best stocks to buy based on his political leanings and conversely what stocks will tumble because of his potential policies.

I’ve read some of those articles and honestly, it sounds like a lot more noise. Just when I’m ready for some calm, we get more noise. “Buy this, buy that, sell this, sell that!”

It sounds so tiring. Especially after the politically noisy season we’ve just had.

So, am I going to change my investment strategy based on the election results? 

Not one bit. I’m not changing anything. And I’ll tell you why. 

The Simplest Thing Can Be the Best Thing

Constantly buying and selling stocks based on the news and hoping to outperform the market is a game very few people win. 

Now are there professionals who can and have beat the market? Sure!

But I don’t care to dedicate my time to trying to outperform a market that around 90% of large-cap fund managers can’t beat over the last 15 years.

Instead, I don’t try to beat the market. I try to just be the market with index investing.

John Bogle, the inventor of the index fund said it best, “Don’t buy the needle in the haystack, just buy the haystack.”

Over the last 100 years, the S&P 500 has averaged around a 10% annual return. Does that happen every year? No. That’s the average over 100 years. 

But since I’m a long-term buy-and-hold investor, these are the kind of results I like.

Getting In and Out of the Market Can Affect Your Return

Time in the market is more important than timing the market. 

In fact, timing the market can be dangerous for the long-term growth of your portfolio. Hartford shared some research they did about investing over the last 30 years. 

If you invested $10,000 in the SP 500 from 1994-2023, your $10,000 would turn into around $180,000. 

Let’s say you got scared during election cycles and pulled out your money you missed the best 10 days during that timeframe (just 10 days) … your portfolio after 30 years gets zapped down to around $83,000. 

If you missed the best 20 days, your portfolio after 30 years shrinks to $48,000. 

Miss the best 30 days … you go down to around $30,000!

From $180,000 by not touching anything to $30,000 if you try to buy and sell and miss out on the best 30 days of the market during that time. JUST 30 days! 

Now I get it … This is primetime for emotional investing. Your candidate lost or your candidate won. Either way, there are a lot of emotions flying around right now.

If the news about the presidential election makes you want to cash in your chips, you may want to think twice. It would be quite difficult to choose exactly when to sell and when to get back in. 

You'd have to be right twice!

Stock Predictions Can Be Wrong

Donald Trump talked up the importance of further oil production in the debates. Does that mean we should all be buying Exxon stocks?

It sounds logical, but according to acclaimed financial writer Morgan Housel, that logic could be flawed. He found that what we think most candidates will do and what they end up being able to do is very different.

For example, during Trump’s first term, there as a lot of similar talk about energy companies being the best place for your investments. Surprisingly, the energy sector was down 8.4% during Trump’s first term. 

In 2008, there were the same calls for buying green stocks based on Obama’s pro-environmental stance. Green companies like First Solar did not end up doing as well as traditional oil companies like ExxonMobil following an Obama presidency. This was because a lot of the policies weren’t able to be passed due to congressional challenges. 

So in short, there are a lot of ideas thrown about during the campaign but not all of them can come to fruition. 

Final Thoughts on the Election Results and Changing My Investing Strategy

With all the noise of 2024, I’m not going to add to it. Instead, I’ll sit back, dollar cost average into my diverse portfolio of low-cost index funds, and let compound interest do its magic.

Will I maybe miss out on some higher returns? Maybe.

Would I rather focus on energy, time and attention to more important things like my family, community and my health? Absolutely.

Now that the election results are in … Are you changing your investment strategy?

Please let us know in the comments below.